Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer.
If you are due to make a permanent move to the UK then -
All income that is brought into the UK will be liable to UK tax, however any of that suffers German tax will allow you to have this tax considered under the double taxation agreement between Germany and the UK.
So how much is the your combined income to be each year (that is to be either brought into OR spent in the UK) and can you also advise the amounts in sterling please.
Yes it may well remain taxed in Germany but under the UK law and contradiction - you will have a consideration of UK tax on ALL income readmitted in the UK - and any German tax suffered will be offset against your UK tax liability.
And if half will remain with your wife - and not come into the UK then you can have some of this mitigated by asking to be considered for UK tax under the Remittance Basis (rather than the normal basis of taxation where you remin liable to worldwide income regardless of its source)
However the remittance basis - whilst it means you are only liable to tax on that income which enters the UK - this does see a loss of UK personal tax allowances (which allows the first £11,000 of income tax free) and after 7 years if you have been resident in the UK for 7 out of the last 9 years, you will then suffer a remittance basic charge of £30,000 (which increases as time goes on - see the increased charges
If however all your income comes into the Uk for you then to honour a payment back to Germany to your wife - then this income will be treated as if the income has been remitted to the UK
I have advised this - IF you wish your German income (which will not be remitted into the UK) to be disregardful for UK tax purposes, then you have to ask to be taxed under the remittance basis -
And if you ask to be charged under the remittance basis, then after 7 years you are charged a remittance charge for the privilege of doing so (as everyone else under the actual basis - normal UK tax rules, is paying UK tax on their worldwide income) - so after 7 years you are charged an annual fee.
If however you are considered for UK tax on all of your income- and then are claiming credit for any German tax suffered, then you will NOT be charged the remittance charge
Yes that rights and if you asked to be taxed under the remittance basis, you also would lose your entitlement (as a UK resident) to the UK personal tax allowances from Year 1 (and this allows the first £11,000 of annual income to be free of tax)
So you either
1) Arrive in the UK and are treated the same as any other taxpayer, where you are considered liable to tax on all your worldwide income - of which the first £11,000 would be tax free - and any German tax you have suffered can be offset against the UK tax liability (as we have a double taxation agreement within the tax treaty between the UK and Germany) OR
2) If some of this German income will not be remitted to the UK (so brought in OR spent via bank card) then you might wish to consider asking HMRC to tax you under the remittance basis which
a) sees the loss of the UK personal allowances AND
b) After 7 years you are charged an annual charge called the remittance charge
I hope this makes n=more sense now. Let me know if I can assist further. However, if you have all that you need, then it would be appreciated if you could rate me foe the time and level of service I have provided (or click accept) This ensures Just Answer credit me for my time
Thanks for your response
Its HMRCs way of deterring those that plan to stay for a long time in the UK (or even settle here permanently) from taking advantage of this remittance of certain incomes as its really designed for those that may only stay in the Uk for a short time, and have income that remains arising out of the UK
But I do not make the rules the UK government do - I am just using my expert knowledge to advsie you of your two considered positions within the UK tax legislation.
If you wish me to work out your specific case then I am afraid this will involve me having to offer you an additional service as per Just Answer policy and this will incur an additional charge. But I must advsie this will be factual information only and NOT representation as to how you should proceed as this is an information side and we cannot represent you l Let me know if you would like me to proceed and I can send an additional free request for additional work
I just need the following additional information
1) is the private health insurance an income that will be paid to you
2) will you be paid income first and then pay your wife from the income paid to you
3) Will both of these sources of income be paid into the UK and spent in the UK
Then we have the full £44363 to be considered for UK tax purposes - the health cover has no bearing on the tax position (as there is no tax relief due on this payment) and as you will pay your wife from your income - this also will have no bearing on the UK tax position
And as you have provided me with the income is one lump sum - I cannot work out the remittance basis for you - I can only advise the normal taxation basis.
So income of £44363 -
Less UK personal allowances £11,000
Leaves £33363 liable to UK tax
First £32,000 at 20% = £6400
Remaining £1363 x 40% = £545.20
Total UK tax due £6945.20
From which you will have suffered £4602.30 German tax which can be offset against the UK tax position so
£6945.20 less German Tax suffered £4602.30 leaves you will a UK tax liability of £2342.90
When you arrive in the UK you will need to apply for a UK National Insurance Number (as this will be needed to register with HMRC for the filing of UK tax returns)
After each 5th April you will be required to complete a self assessment tax return to declare all your foreign income and the German Tax suffered.
Then any tax you owe (after the German tax has been considered) will be paid to HMRC no later than the following 31st Jan
So if you arrive in 2016 - then after you have registered with HMRC for self assessment come 05/04/2017 you will ned to complete a UK self assessment tax return to declare all German income (for the period of when you arrive to 05/04/2017 only - as the year you arrive will be a split year) then any tax owed you will pay no later than 31/01/2018
I have added a link here
1) How to apply for a UK National Insurance Number https://www.gov.uk/apply-national-insurance-number
2) How to register for self assessment with HMRC https://www.gov.uk/register-for-self-assessment/not-self-employed
Let me know if I can assist further
No your separation does not affect your UK tax position at all
I do not need your income split - it was you that advised that some of it was liable to tax in German and some not - but my calculations take the UK tax position only into play (plus the overall German tax suffered)
And if you wish me to look at the remittance basis (which I am happy to do) then I need you to list each income source and the gross amount that relates to that source and also any tax that would be paid in Germany on it and whether it will or will not be remitted or spent in the UK
However I will now not be able to reply this tomorrow as we have been communicating on and off all day and I need to have some down time before an early night as a 4am start to travel to clients in the morning so may not reply until later tomorrow afternoon if thats acceptable
Lovely - I will await the breakdown of what will and will not be spent/remitted into the UK - and will answer thus later today
I need the breakdown of tax I am afraid or I cannot work this out.
And its irrelevant that your wife will get half - its whether you remit this share into the UK at all - and I just need to know from you what will come into the UK and what wont, and of the amount that does how much German tax will arise
I understand and all I can do is estimate the remittance basis in this scenario (the figures will not be exact
So to recap the actual basis (taxed on your worldwide income saw you having an additional tax liability of £2342.90 (after the full German tax considered)
This way - you would be considered on £22182 - and as you would not be entitled to UK personal allowances (although at this stage NOT charged the remittance basis charge for the first 6 years of residency in the UK)
So £22182 x 20% = £4436.40 less the estimated German tax of £2301.00 would see you having a further £2135.40 liability in the UK - so you would be £207.50 netter off by electing for the remittance basis for the first 6 years, but then changing to actual basis in year 7 (2022/2023 tax year)
Yes you are right - all pensions and annuities are treated as taxable income in the UK regardless of their treatment in their originating country
You are very welcome
You will need to copy and paste into a word document I am afraid!
You have already paid (as you accepted the additional Q & A time which also then accepted the initial payment) - so you are all done - please do not rate again or you will be charged a second time
Yes you are taxed in Germany but then as you will be living in the Uk and
remitting this money to the UK you will have to be considered on this income fro UK tax purposes
I advised this in my first answer when I stated "All income that is brought into the UK will be liable to UK tax, however any of that suffers German tax will allow you to have this tax considered under the double taxation agreement between Germany and the UK."
Is your German tax consultant familiar with UK tax law ? As that is all I can advise on - and I worked for HMRC for 26 years and since 2009 run my own accountancy firm and ALL remitted income regardless of its source, its tax position in its originating country or whether foreign tax has been suffered is LIABLE to Uk tax - its just any tax suffered in its originating country is then credited to you.
To back this up - link here from HMRC (this is the simplistic advise)
I have advised fully on how the UK will treat your incomes - I cannot advise beyond that
ANY income that is remitted to the UK is considered within the UK taxation regime, whether a pension or state pension
What the treaty actually means is that your country has first consideration of any tax position.
For example any UK citizens or leave the UK remain having to have their tax position managed here in the UK with their state pensions and some governmental pensions HAVE to have the UK tax position considered here first and foremost but they still are considered within the new countries tax jurisdiction (less any UK tax suffered) but that does NOT negate the need for the country of residence to consider this income
Thats all I can advsie as NO income is ignored by HMRC - I am sorry I cannot comment further